1979 (7) TMI 236 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of proviso to section 5(2)(A)(a)(ii) of the Orissa Sales Tax Act regarding tax liability on goods utilized for different purposes than specified in the registration certificate.

Detailed Analysis:

1. The case involved a registered dealer under the Orissa Sales Tax Act who purchased paper from its principal, converted it into exercise books, and sold them. The Sales Tax Officer added the purchase turnover to determine the taxable turnover, alleging contravention of declarations. The Assistant Commissioner upheld the demand.

2. The Tribunal, relying on precedents, affirmed the contravention of declarations once paper purchased on the basis of declaration was converted into exercise books for sale. The Tribunal also rejected the claim for a concessional tax rate and upheld the demand.

3. The Court considered the reference made under section 24(2) of the Act, where the only question was whether converting paper into exercise books constituted a violation of the declaration and attracted liability under the proviso.

4. The counsel for the assessee cited a previous Court decision where the conversion of mill-made cloth into different products did not change the specie, but the Court found it inapplicable. Another case highlighted the distinction between exercise books and paper, supporting the tax imposition on commercially different goods.

5. A previous Bench decision of the Court emphasized that converting paper into specific products like letter pads and bill books constituted a contravention of the declaration, attracting the proviso's liability. The Court rejected the argument that such products still qualified as paper.

6. The Court referred to a Patna High Court decision regarding goods catalogued as a class, emphasizing the importance of direct Bench decisions. The proviso to section 5(2)(A)(a)(ii) and Rule 27 of the Sales Tax Rules were analyzed to conclude that contravening the declaration invoked the liability specified in the proviso.

7. Ultimately, the Court held that the Sales Tax Officer was justified in applying the proviso and demanding tax on the sale price of goods utilized differently than specified in the registration certificate. The reference was answered accordingly, with no order as to costs.